23rd October 1998 Archive

The memos show Netscape expected not to be paid for some of its browsers, but we knew that already...

Microsoft attorney John Warden seems adept at the art of flogging a dead horse, if today's court proceedings are anything to go by. The latest 'dynamite' Netscape email revealed -- shock horror -- that Netscape co-founder Marc Andreessen was in 1994 committed to giving Navigator away for free. This would of course seriously take the wind out of accusations that Microsoft had trashed Netscape by giving Internet Explorer away for free, if it were entirely true. But according to the very memo produced by Warden, Andreessen wrote: "We're absolutely committed to giving [Netscape's browser] away for personal use." (our italics) This is no more and no less than a statement of the course Netscape actually followed. Netscape followed the then ground-breaking course of establishing a very high volume software distribution channel on the Web, allowing people to use Navigator whether or not they took out a licence, and effectively writing-off the licences "for personal use" that never got paid - ie. most of them. Netscape instead made its browser revenue from corporate and ISP licences, and this worked fine until Microsoft started giving IE away, and rolling up Netscape's corporate and ISP deals. Netscape's sales model was based on a perfectly rational estimation of the willingness of the 'personal' user to cough up the bucks, combined with a similarly rational estimation of corporate customers to do so. Ordinary users don't pay, corporate users can be persuaded to go legit fairly easily. So Andreessen was just setting down a valid business plan that has been publicly known for some years now. What, therefore, does Warden think he's driving at? ® Complete Register trial coverageClick for more stories

US memory giant Micron technology has filed anti-dumping charges against Taiwan's DRAM manufacturers. The petition, filed with the US Department of commerce and the International Trade commission, claims Taiwanese companies are exporting DRAM to the US at lower than manufacturing cost, and that this is causing injury to US DRAM manufacturers. Micron, that is. Micron has fought long and bitterly against Korean, Japanese and Taiwanese DRAM companies in a succession of anti-dumping actions. Taiwanese DRAM companies currently have a heavy surplus of DRAM (which isn't exactly unusual, today), but claim to be managing it carefully, and deny shipping it out at fire sale prices. But after long years battling forlornly against the Far East, Micron may at last be on the up. It absorbed TI's memory operations earlier this year, and recently won a $500 million investment from Intel. With the old enemies now all desperately short of cash, this is clearly the opportunity for a combined legal and technical assault. ® Click for more stories

Outfit that was supposed to be profitable from the off drops $403 million, Philips says it was "interesting"

Philips is pulling the plugs on its year-old mobile phone joint venture with Lucent, with company president Cor Boostra describing it as "an interesting and costly venture". More properly, it appears to have been a disaster, but at least he's kept his sense of humour. Philips Consumer Communications, which was 60 per cent Philips-owned and 40 per cent Lucent, was intended to be a 12,000 employee, $2.5 billion mobile and cordless phone giant and, interestingly enough, at its formation last June said Michael McTighe, managing director of Philips' consumer electronics business and the CEO-elect of PCC, said: "This joint venture will be profitable from day one." One might observe that this speaks volumes about the calibre of certain companies' financial controllers. The joint venture has in fact lost $403 million so far this year, and is being split up retrospectively from September 25, with the two companies taking back their assets and employees. Lucent may well kill its operations in the area, while Philips is expected to implement substantial job cuts. Curiously, Philips stock jumped eight per cent on the news, probably on the basis that at least it was going to stop hurting. The company also reported a 37 per cent drop in Q3 profits, to $241.1 million, blaming falls in income in Consumer Products, Components and Semiconductors. Within this however seemiconductor sales grew ten per cent. Boonstra, who may not be of this planet, went on to tell reporters that Philips now intends to be one of the top five players in GSM, and that next year would be "another investment year". As the Lucent JV was a bid to form a top four mobile company, and it was, um, an investment, this may not bode well. ® Click for more stories

As Jim Barksdale heads for a fourth day on the stand, we could be heading for the Big Z

It is a fairly common practice for defendants against the DoJ to subject the principal witnesses against them to a long cross-examination. This has the effect of making the case appear to be Netscape versus Microsoft, rather than the US government against Microsoft. Microsoft also wishes to slow down the case, to make it as boring as possible, so that there are fewer headlines about it. It was interesting that David Boies, the DoJ's lawyer, said that Judge Jackson had not discussed speeding up the pace of the trial on Wednesday, during the meeting in his chambers after the court proceedings, as had been suggested by a lawyer who was present. It looks as though a lawyer from the 20 states is playing a private game, perhaps to create some pressure so that there will be time for the states to examine witnesses after the motion to this effect that is expected. The court will not sit on Fridays, Judge Jackson had decided in his ground rules for the conduct of the case, so Barksdale's cross examination will continue on Monday. Extracts from the Bill Gates tapes are expected next week, but it is likely that the cordon sanitaire that has been erected to protect him will prevent the tapes being released to the media. Since the American public has developed a taste for videotaped evidence, pressure will mount for their release. At the moment, the court of appeals has to decide whether to uphold the Congress-made law and release them, or to have some more judge-made law and suppress them. ® Complete Register trial coverageClick for more stories

"That's absurd... I was in the meeting. I know what happened. I was a witness. You weren't." That was how Netscape CEO Jim Barksdale reacted to an accusation of lying by John Warden, Microsoft's trial attorney, as he continued his questioning of Barksdale for the third day yesterday. The meeting referred to took place at Netscape's headquarters on 21 June 1995. Barksdale was denying that he invented the story of Microsoft's proposed browser market-sharing in order to protect the monopoly that Netscape had with its browser. Barksdale testified that Microsoft had suggested that a line be drawn to divide the market (illegally) between Internet Explorer and Netscape. Barksdale confessed that "it irritated me that [Microsoft] brought up this line" because it would preclude Netscape competing in the big market then anticipated for Windows 95. Gates has called this accusation an outrageous lie. Warden has been trying to make the most of earlier meeting between Netscape and Microsoft, pointing to an exhibit drawn up by a lawyer for Netscape that gives a chronology of meetings and contacts between Netscape and Microsoft. It omitted mention of Clark's email to Microsoft, which is hardly surprising as Clark could hardly have wished it to be know by Netscape staff that he was in contact with Microsoft in a way that made it look as though his primary concern was to protect his personal investment in Netscape. Apart from the testimony of those present, the only evidence of an improper suggestion from Microsoft appears to be a note that Marc Andreessen wrote on his laptop at the time. This is going to make it difficult for Judge Jackson to decide on the issue -- since one side is lying -- but fortunately he does not have to make a life-or-death decision on the matter because it is the pattern of behaviour that the DoJ has to establish to win the case, from a preponderance of evidence. Jackson still has to hear the cross-examination of Microsoft's witnesses about the meeting. The other event not in the chronology was a meeting that Barksdale had with Microsoft in Redmond on 2 June 1995. Barksdale described the attitude of Microsoft participants as "very friendly" and "non-threatening" in an email to Andreessen. He also wrote in his notes that Microsoft proposed an investment in Netscape if a working relationship were established. In addition, it would be easier for Microsoft to neutralise the challenge that Netscape presented if it had as much knowledge as possible of Netscape's products and plans, which is of course why Microsoft wanted a seat on Netscape's board and was willing to consider an equity investment. Netscape also needed some technology from Microsoft if there were to be collaboration: a browser-scripting engine and an Internet dialer. Barksdale said in his email to Andreessen that Microsoft was amenable to providing these. At the time, Netscape was trying to get its browser for Windows 95 finished, and it would therefore have been unwise to cross Microsoft at the time. Barksdale omitted to mention the possibility of a Microsoft investment in his testimony about the 2 June meeting, but there appears to be no Machiavellian reason for this. The significance of these omissions from the chronology is not as great as Microsoft would like it to be thought. Since both involved Microsoft, it is hard to see how their omission could be of any consequence. What is interesting is that Warden appears to be labouring over them as part of his desire to establish that there were frequent meetings and a friendly relationship with Microsoft. It looks as though Warden is aware that his client's ability to deny the Netscape market-sharing claim is strictly limited. The earlier days of questioning have served to get the case off the front pages, so that if Warden is unable to break Netscape's story, the minimum damage would be done to Microsoft's reputation. As is normal in these matters, Barksdale is being attacked all the time for remarks he has made in the past, such as having a "God-given right" to a 95 per cent share in the browser market. This is of course harmless alongside Steve Ballmer's past claims to a 100 per cent of every market. Warden asked Barksdale whether he wanted the DoJ to bring the suit "to get your biggest competitor out of the way". Barksdale replied that this was not true. It did not help Microsoft when Warden teased from Barksdale his reason for contacting the DoJ: "I think when Compaq cancelled our contract... I said, I've had enough." Warden has taken to calling Netscape "the government's ward" in an attempt to suggest that the DoJ has some special affection for Netscape: the remark was like a sound bite used in playing to juries, but there isn't one in this case. Warden was out of his depth when he tried to get Barksdale to admit that it should be grateful to Microsoft for providing a TCP/IP stack, claiming that such software had once had a $100 price tag. Barksdale contained his scorn for the lawyer's ignorance when he pointed out that software like TCP/IP was not an application, but a protocol that could be downloaded free of charge from the Internet. Another line of examination that Warden tried was to suggest that Netscape did well despite what the DoJ characterises as anti-competitive acts. Barksdale was not drawn, and suggested that the number of Navigator users was probably nearer to 25 million than the 40-65 million that Microsoft is claiming Netscape added between October 1996 and October 1997. Barksdale said that Netscape's income took a devastating downturn when Microsoft started offering its browser free of charge. Warden introduced an email from Andreessen to Barksdale in an attempt to show that Netscape had planned to give away its browser, and that therefore Microsoft's inclusion of its browser with Windows was not a predatory move, as the DoJ is suggesting. On 13 October 1994, Andreessen wrote that Navigator would be "available free for personal use via the Internet". On 24 November 1994, he wrote to an Internet newsgroup that "we are absolutely committed to giving 1.0 away for personal use. Watch us". Barksdale said that Andreessen was giving his opinion, and not speaking for the company, which made it sound as though there was some internal dissent about charging at Netscape at the time. However, Barksdale said that in a few cases, Netscape had given its browser away "free" to companies and put up other prices of products to compensate, to accommodate a few companies where internal political problems over "free" browsers had occurred. Barksdale said that the experience showed that such an approach was impracticable. Warden has so far very assiduously avoided dealing with the 21 June 1995 meeting for the first two days a point stressed by David Boies, the DoJ's trial lawyer, outside the courtroom. And has made no substantive impact so far on the matters that have been examined. Some details have been fleshed out, and some minor Netscape embarrassments uncovered, but so far Barksdale's testimony has held up to tediously detailed questioning. ® Complete Register trial coverageClick for more stories

Programmer Dan Brumleve has uncovered his latest Netscape Navigator bug. Mere weeks after discovering two glitches that expose users' cache contents and the list of sites they have visited to unauthorised scrutiny, Brumleve revealed that it's possible to swamp the area of memory the browser sets aside for storing MIME type information, causing the application to bomb. Brumleve reckons that it would then be possible to run code on that machine. The bug appears in the browser's plug-in download mechanism. Fortunately, the bug only affects the Unix release of Navigator. Netscape said it is working on a patch. ® Click for more stories

The International Telecommunications Union has, as anticipated, set a preliminary standard for DSL modem technology, according to Lucent, one the many companies involved in the specification negotiations. The standard, now dubbed G.992.2, applies to G.lite Digital Subscriber Line modems, which can make connections of up to 1.5Mbps, far in excess of analag modem technology. G.992.2 should be formally ratified by the ITU next June. The quiet agreement is a distinct improvement on the loud hostilities that accompanied last year's attempts to combine Rockwell's k.56flex and 3Com/USR's x2 56kbps modem technologies into a single standard, v.90. Kevin Cone, strategic marketing manager with the Lucent's Microelectronics Group, said: "The industry has proven it can avoid a repeat of last year's 56kbps modem standards battles." ® Click for more stories

Hewlett-Packard admitted yesterday that it is exploring ways of offering Linux. But unlike other hardware vendors who have rushed to back the popular OS as a possible alternative to Windows NT, HP's take on it is rather more interesting. According to Lee Wilson, the director of marketing for HP's brand of Unix, HP-UX, the company is evaluating Linux's potential for controlling embedded systems. Quoted on US newswire C/Net, Wilson said: "We do see a place for Linux in certain application ares." These include what Wilson calls "Web appliances" -- single-function boxes that can be plugged into a network, such as firewalls or mail servers. Wilson also said HP was busy porting Linux to its PA Risc processor. Put these two snippets together and you have the core of a neat little gameplan. HP intends to shift its Unix boxes over to Intel's 64-bit Merced processor once it becomes available around the turn of the century. This, of course, leaves the PA-Risc at rather a loose end, and that's not something you'd have thought HP would want to do, having invested as much in the technology as it has. This Web appliance concept provides a role for PA-Risc in the post-Merced world. Whether Linux will be the host OS, of course, remains to be seen, not least because of Microsoft's own plans to create an embeddable version of NT. However, it would offer clear price and performance advantages. Looking at Linux as an OS for the commercial computing arena, Wilson is sceptical about its chances. While the forthcoming version 2.2 of the OS' kernel will improve its support for multi-processor systems, he reckons it still won't threaten other versions of Unix designed for such systems, such as... er... HP-UX. Equally, its inability to handle load balancing and resource sharing, both key requirements of enterprise servers, and its lack of a formal support structure will keep enterprise software vendors like SAP, PeopleSoft and Baan away, he added. ® Click for more stories

Mylex turned in a loss for its third quarter after taking a recurring charge into account. Sales for the quarter amounted to $36.2 million, up by 23 per cent compared to the equivalent quarter last year. The charge, of $4.3 million, meant Mylex made a net loss of $2.1 million. In July of this year, the company restructured and the charges included redundancy payments, write off of stock and consolidation of facilities. Without the charges, Mylex said it would have made a profit. Al Montross, president and CEO, said: "We believe this quarter's results mark an important first step towards improved financial performance for Mylex and sends a strong message to our stockholders and customers." Growth came from Europe, the Pacific Rim and domestic distribution, said Montross. Its entry level RAID controller helped contribute to its sales. ®

The US Federal Trade Commission's hearing into Intel's alleged antitrust business practices has been delayed again. An administrative judge yesterday pushed the date of the trial back to 23 February 1999, citing the "unusually great" accumulation of evidence being prepared for the case. His decision was made after both Intel and FTC lawyers requested more time to evalauate each others' evidence. The six-week delay marks the second time the trial has been put back. Originally set for the beginning of January, the hearing was recently moved to 12 January to accommodate the presiding judge's work schedule. ® Click for more stories

PC company Gateway said it had shipped 887,000 PCs in its third quarter, a 43 per cent increase over the same period last year. It posted revenues of $1.2 billion, a 21 per cent increase on last year's figure, and showed net profits of $80.6 billion. In the equivalent quarter last year, it made a net loss of $107.1 million. Ted Waitt, CEO of the largely direct vendor, said the increase in PC shipments was due to its Your:)Ware programme, back to school buys, and sales through its Country stores. Gateway claims it now has 8.5 per cent US market share, and most of its revenues were driven by domestic sales, which accounted for 89 per cent of worldwide shipments. European sales, said Waitt, were flat but the Asia Pacific region grew, despite the economic woes, and rose by 74 per cent year on year. The company's acquisition of ALR this time last year, meant that it expanded its server sales by 297 per cent, Waitt said. Gateway managed to slightly increase its gross profit margin from 20.6 to 20.8 per cent. ®

Games developer Sales Curve Interactive (SCi) is taking legal action the British Board of Film Classification (BBFC), Britain's official movie and software censor, for refusing to issue a four-minute trailer for its forthcoming game, Carmageddon II: Carpocalypse Now. The company claims the BBFC's delay is holding back the full release of the game. SCi's remedy is to issue what is known as a Mandamus Order, which forces the BBFC to get a move on and issue a certificate "within a couple of weeks", according to the company. The Order also gives SCi the right to appeal against the BBFC if it refuses to grant a certificate -- effectively banning the game from sale in the UK. The BBFC used the same tactic last year when SCi sought certification for the original Carmageddon. Under UK law any game that contains the realistic depiction of human beings must be submitted to the BBFC for certification. Ironically, if those same human beings are described as zombies and given green blood, the BBFC has no problem with the game. A clear case of discrimination against a minority (the living dead), we reckon, and probably grounds for further legal action... SCi had asked for an 18 certificate, marking the game as a adults-only title. Carmageddon and its sequel allows the player to drive around virtual cities wrecking other vehicles and running down pedestrians and animals. A typical level is Beef Curtains, in which the player must kill as many cows as possible in the time limit. Pretty sick, we agree, but hugely popular among pimply PC games players. ® Warning Readers of a nervous disposition should look away from the following screen shot. Click for more stories

High-street retailers selling expensive warranties on home computers to the general public are generating more profit from the warranty than the PC sale. The most recent expose, a survey published in Computeractive magazine, reinforces earlier findings by Which? magazine and others, and the magazine's editor Jim Lennox warned that many extended warranties don’t offer good value for money. The main culprits are big-names, most notably, Dixons, Curry’s and PC World, all charging £299 for a three-year warranty, while rival Comet charges £289. The costs vary enormously, ranging from £84 to £300, but many warranties have spurious value anyway. Some offer telephone helplines at a stinging 60 pence per minute, and most don’t cover accidental damage, which is the most common cause of computer failure. Computeractive said that most PC faults occur within the first year of ownership when the systems are still under manufacturer’ guarantee, and manufacturers offer better value than the chains, with Dell UK leading the pack at £120. ®

The Fibre Channel Group Europe Ltd, the first European company to offer third-party training in Fibre Channel Technology, is a joint venture with the prominent US Fibre Channel Group. Based in Reading Berkshire, the new company is headed by managing director Sam Samuel and the US connection is cemented by the participation of two prominent board members, Dr Ed Frymoyer and Joe Mathis. Frymoyer is one of the forefathers of fibre channel technology and founder of the Fibre Channel Group (USA). Joe Mathis authored many fibre channels standards while working at IBM and co-founded Medusa Labs which specialises in fibre channel testing and configuration. ®

Keltec and Progress, two leading UK Digital dealers, are merging operations and moving towards a flotation within three to five years. They said that no redundancies are planned. Bracknell-based Keltec reported £23 million turnover last year to Progress’ £11 million, and despite talk of merging, Keltec is taking the upper hand and it is Keltec senior management that will run the show at Keltec Progress. Chris Davies, Progress founder and managing director will handle operations and services, while Keltec’s chairman, Brian Griffiths, and managing director John Fison, retain their current positions and titles, and Fison is assuming overall responsibility for sales, marketing and personnel. Fison said the merger made sense for a number of reasons. The companies operate in complementary markets and both wanted to create a larger company that could float relatively quickly and compete more effectively with big dealers. He added: "We wanted to develop… outside the City [and Progress'] strengths are process manufacturing, telecomms, education and research.” Progress employees are relocating from Chesham, Buckinghamshire to Bracknell and from Burton in the Midlands to Keltec’s new premises in Birmingham. All staff will be retained and Keltec Progress is launching an employee share incentive scheme to attract staff. Keltec’s business was exclusively DEC-based until early October when it became a Sun partner, a reaction to Compaq’s acquisition of DEC, which Fison acknowldged was double-edged since it ushered in new opportunities and threats from competitors like Computacenter. ®

RM, trading at around £2.95, is being tipped as stock worth buying. The company supplies computer kit to around 50 per cent of the UK’s primary schools and 33 per cent of secondary schools, and the Investors Chronicle said: “It is in an enviable position given the government’s pledge of £400 million over four years for capital investment in the nation’s classrooms.” RM’s annual sales are over £100 million but schools spend only one per cent of their budgets on IT and even a small increase would have a significant effect, boosting RM’s revenues and profits. The Chronicle cites some big contract wins, including the management of a £43 million project from Dudley Council, and a huge deal with Germany’s largest educational publisher. ®

Did Apple attempt to buy Palm Computing from 3Com? Apparently, according to interim CEO Steve Jobs, quoted in an interview with Fortune. It may even be looking for other possible acquisitions. While discussing the possibility of Apple moving into businesses beyond personal computing, Jobs said: "If Apple can find things that are complementary to its core, that's great. I thought buying the PalmPilot from 3Com would have been complementary, but it didn't come to pass [our italics]. I won't go into what other complementary things there might be, but when you look back in a year, it will all make sense." The obvious interpretation is that Jobs is talking about the gadget itself, but why discuss it (a) in a section on finding complementary products to Apple's own and (b) why then claim it "didn't come to pass"? Sounds damn like a failed buyout negotiations to us. Palm's history is one of acquisitions: first it was bought by US Robotics, which in turn was snapped up by 3Com. Earlier this week, it emerged Bill Gates had attempted to buy the company from its current owner, though, apparently like Jobs, he was rebuffed. Given the disparity between the Palm line and the rest of 3Com's products, the networking specialist might well take a serious interest in offers to buy Palm. Presumably Apple's bid, if it made one, proved too low. The company may have returned to profitability, but it's not quite in a position to go off buying others, thought, again, Jobs hints that he might well be planning to do so now. Such a deal would have been ironic given one of Jobs first acts on his return to the task of running Apple was to can the Newton handheld project (see Harris bangs Apple's head over Newton). That said, the PalmPilot has proved far more successful than Newton, which always had to battle against the negative impressions Apple created among potential buyers with its first, rather poor version of the technology. Of course, there is a third possibility: hints of a Palm buyout are nothing more than an example of the famous Jobs 'reality distortion field'. In the same interview he claims to have received death threats over his decision to end Apple's MacOS licensing plan, so you can never quite tell. ® Click for more stories

Kalamazoo Computer won’t make it back into the black this year, despite selling off its security print division for £12 million and attracting a £17.8 million equity investment from US investors, Reynolds & Reynolds. Kalamazoo is investing heavily on its next generation software, developing specialised systems for franchised motor dealerships. The Investors Chronicle calculates that spend will match last year’s £4.1 million, and the best Kalamazoo can hope for this year is breakeven. ®

Supplies of the now obsolecent 286 part are being snapped up by large companies eager to use it in PCs, it has emerged. Earlier this week, a source working for French memory company Dane-Elec told The Register that high street company Marks & Spencer was looking to upgrade 1,000 286 PCs. Intel does not manufacture 286s, any more, even for the embedded market but there is a company which will sell the parts. Rochester Electronics, which describes itself as "leaders on the trailing edge of technology" has a multitude of 286 chips, not just from Intel but from AMD too. The site says it has 80 million such parts in stock. A quick look at its Web site showed that it has many millions of such parts. The source at Dane-Elec told The Register that there were many assemblers looking to build machines using so-called obsolete 286s, using defunct memory. "It's very cost effective," he said. He would not be drawn on which operating systems such a PC might use. ®

NEC chairman Tadahiro Sekimoto has resigned following revelations of the company's involvement in a contract-padding scandal, Reuters reported today. Fortunately for Mr Sekimoto, Seppuku is no longer the only answer to public disgrace -- Sekimoto has not been implicated in the scandal, and said: "I am not taking responsibility [for the scandal], but as the highest ranking official at NEC I want to socially and morally put an end to this." Presumably that's why NEC will be retaining his services as an advisor to the company. NEC president Hisashi Kaneko retains his post. The scandal emerged last month when three NEC officials were indicted for persuading the Japanese Defence Agency to reduce payments NEC was to the Agency for overcharging it for equipment it supplied. In exchange for the reductions, NEC employed formed Agency staff members as executives. Meanwhile, the troubled Japanese economy resulted in a fall of 11 per cent in NEC's sales for the first half of the company's 1999 fiscal year, compared to the same period last year. That put revenue for the period at Y2113 billion, resulting in a Y24.5 billion pre-tax loss. Looking ahead, NEC said it intends to beef up its systems integration business while restructuring its semiconductor operation. It also intends to embark on a programme to reduce fixed expenses and "shift management resources", though it was not forthcoming on details. ® Click for more stories

IBM said this afternoon it will create 700 jobs in the Republic of Ireland because of an unprecedented demand for hard drives. The company has a number of such plants in Europe, including a facility in Mainz and in a Hungarian plant at Szkesfehervar. Said Walter Meizer, who heads up IBM Emea's storage division: "This is a state of art facility with highly skilled employees." Demands for more platters had influenced IBM's decision to open the plant, said Meizer. IBM did not say whether the Irish Development Association (IDA) had helped it to set up the new fab. Arno Hebgen, the VP in charge of IBM's European disk business unit, will manage the plant. ®

Gagging orders from giant corporate reseller Computacenter have been passed to a former senior executive who is suing the company for millions of pounds. Dr Mark Sawicki’s case of discrimination was allowed to proceed after a UK Employment Tribunal tossed out Computacenter’s objection that the former engineer had signed a £52,000 deal to keep quiet. Sawicki said today the victory meant other former employees now believed the gagging contracts they have signed were also invalid, and they were supplying them to him to help prove his case. If Sawicki wins his case, he is seeking the 300,000 Computacenter shares he would have had if not asked to leave by company managing director Philip Hulme. He said current value was about £1.3 million but he would seek an equivalent value to the shares at their 12 month peak - currently about £3m. Sawicki is claiming discrimination because he was not able to take the share options with him when he left the company, unlike other executives who have also left. "We were much less believing in ourselves than the judges at the tribunal were. It now takes the case to complex levels because we will have to prove everything is linked," he said. Sawicki said a salesman called him a ‘bloody Pole’ in 1991 without fear of reprimand because of a high sales record as an example of racism going unchecked. He said he needed to link these with his sacking in 1995. Company secretary Alan Pottinger said last week that the contracts, called Compromise Agreements, were used in cases where it makes it easier for staff to leave the company. The number signed was in double figures. Two recent contracts signed were with former maintenance staff, whose complaints in 1994 sparked a four year investigation by the Commission for Racial Equality which is due to finish in November. The Employment Tribunal is also due to decide the sexual discrimination case of Caroline Olds, found to have been unfairly dismissed by Computacenter two years ago. ®

Hong Kong’s giant PC Chips Group has merged with Elitegroup Computer Systems (ECS), as predicted yesterday in The Register. The financial details remain shadowy, but it looks like an acquisition in all but name. An Elitegroup company statement said that a merger took place on October 19, and Paul Chou, managing director of Elitegroup Computer Systems UK, confirmed that Johnson Yang, PC Chips’ chief, is now CEO and chairman of Elitegroup. He said: “Mr Yang started buying shares in Elitegroup and within three weeks he was the single largest shareholder. He was then appointed to the board of directors along with Mr Chen of Hsing Tech Enterprises [Hsing Tech Enterprise is PC Chips’ Taiwanese manufacturing facility.]” PC Chips is about four times the size of Elitegroup but Mr Chou insisted that the troubled Elitegroup will not be subsumed into PC Chips. James Hsu, Elitegroup’s vice chairman, said the entire Elitegroup board backed the merger, and he described it as, “the perfect marriage that will place us as the world’s number one mainboard manufacturer.” Johnson Yang commented: “PC Chips has unparalleled purchasing power and production efficiency superiority over its rivals [and] our merger brings together our strategic alliances with the major PC component and peripherals manufacturers.” It is PC Chips’ purchasing power that should help Elitegroup cut costs and get back into profit after its disastrous foray into the manufacture of CD-ROMs. PC Chips Group is the world’s biggest independent producer of motherboards with around a 10 per cent marketshare and the capability to produce over one million units per month. The combined output of PC Chips and the Elitegroup will be around 1.5 million units. PC Chips operates in the UK through its wholly-owned Protac distributorship and Mr Chou said that Protac and Elitegroup UK will not be merged into one operation. ®